Logistics is bringing the right items to the right place at the right time. Military logistics could spell victory or defeat. In business, logistics is important in keeping your bottom line positive and profitable. As a Brisbane bookkeeper, I’ve had a lot of experience working with companies with the best products, the best management, and a lot of market opportunities, yet have failed due to poor logistics management.
Business logistics management is making sure that you have enough goods available for sale as buying customers need them, while minimizing costs of merchandise that include purchase price, shipping, and warehousing. This is not easy to do. However, learning how to manage your supply chain should be the first thing to learn when setting up a business.
Importance of Logistics Management to your Business
Reduce Overhead Costs – Good logistics means acquiring enough goods at a time, no more and no less. Buying and storing more than what is needed would mean additional warehousing and storing expenses. Purchasing less would mean ordering more often that could translate to higher shipping expense and you also risk low inventory and stockouts.
Promote Customer Satisfaction – Having items available at all times promotes dependability of the customers in your business. Logistics also mean that your goods are at its prime condition. Overstocking does not only mean additional expense, it could also spoil some of your merchandise. This is especially important if you are carrying perishables and food items. A disappointed customer almost always never comes back.
Create Smooth Manufacturing Operations – Logistics management is very important to manufacturing companies because it practically affects all the major business activities of the entity. Unlike a merchandising or a service company where you could continue selling even if you have several portions of your shelves empty, a manufacturing company will stop operations if it runs out just one manufacturing component. A bakery will stop baking bread if it runs out of yeast.
Sustain Business Growth – The smooth business operation, streamlined overhead, and good customer relations all boils down to business growth. Good logistics management leads to sustained turnover of investments and cash flow. Brisbane bookkeeping and accounting principles subscribe that a well sustained cash flow and turnover of investment are signs of a flourishing enterprise.
Major Types of Business Logistics
There are several types of business logistics that most businessmen have to deal with. Depending on your type of business, you can be dealing with one or more.
Procurement Logistics – This type of business logistics is applicable to almost all businesses. This is the art of managing the acquisition and purchase of goods, raw materials, merchandise, and other business supplies and needs. This is not merely looking into the best deals and lowest prices, with logistics; you also have take into consideration the shipping costs, inbound delivery modes and schedules, and demand levels.
Distribution Logistics – Most companies also have to deal with distribution logistics, or the aspect of logistics that covers the efficient distribution of goods. This is how you will bring your products to the right customers at the right time. Major considerations for this include demand cycle, marketing, outbound delivery modes and schedules, warehousing, and order processing.
Production Logistics – This type of logistics management affects manufacturing companies. Businesses usually have a manager or a team of logistics planners tasked to make sure that production runs smooth. Their job is to make sure that raw materials, skilled labor, working machinery, and technical knowledge are all in place when needed. Other considerations include factory layout, labor management, supplies and raw material inventory, and integrity of the produced products.
Aside from the production logistics, a manufacturing company also has to manage its procurement and distribution logistics. Larger corporations and conglomerates hire logistics managers to oversee each of its logistics needs. For smaller companies, it is mostly the owner who takes care of everything. It is tricky and complicated, but it can be done. If things get too overwhelming, get some help. Brisbane bookkeepers and accountants can help you create a logistics system that will fit your business.